PUC Keeps Renewable-Energy Bid Process

In a move that frustrated Southern California Edison Co., the state Public Utilities Commission refused Wednesday to set aside a procedure it established to guarantee producers of renewable energy a role in meeting the state's future power needs.

Instead, the agency proposed two relatively simple changes to its auction procedures, which have been contested by the state's utilities but are worth billions of dollars in contracts to producers of energy from wind, solar, geothermal or biomass sources.

In response to utility complaints that new electricity sources are not currently needed, the commissioners proposed deferring 25% of the purchases required of Edison and San Diego Gas & Electric Co. under the auction rules until at least 1998.

In answer to complaints that some independent companies had skewed their bids in order to gain unfair returns, the commissioners proposed a cap on potential profits.

The PUC set a 20-day comment period before the proposals become rulings.

"We think (the cap) is a fair solution," said Jan Smutny-Jones, executive director of the Sacramento-based Independent Energy Producers Assn., which represents non-utility power generators.

Virtually all the parties petitioned the PUC to amend the auction procedures in one way or another. But Edison had called for the most drastic solution, contending that its portion of the auction should be thrown out altogether.

In a surprise move Tuesday, the Rosemead-based utility made a separate deal to buy about 60% of the electricity required by the PUC from one of its bidders--a deal the utility still wants the agency to accept in place of the open auction.

But for now at least, the PUC clearly has decided to keep the auction process basically intact.

"We're still disappointed that we're having to go forward with this at all," said Don Fellows, Edison manager of non-utility power purchases.

The utility has estimated that the terms of the auction will add about $500 million to ratepayers' bills over the next decade. The Independent Energy Producers say that according to Edison's own numbers, they believe ratepayers stand to gain by $500 million.